Starbucks Perks Up Mobile Payments Program

In January 2011, Starbucks debuted a new way for customers to pay for coffee—through the brand’s mobile app. With 2-D barcode scanners installed in nearly 9,000 of its store locations, the coffee chain has served as a model for retailers looking to enter the mobile payments space. Adam Brotman, who leads digital strategies for the Seattle-based coffee chain, talked to eMarketer’s Lauren McKay about why the mobile payment program works for Starbucks and where he thinks the market is headed.

eMarketer: Why did Starbucks get involved with mobile payments?

Adam Brotman: Innovation, responding to customer feedback and enhancing the customer experience are at the core of Starbucks’ mission. Starbucks’ mobile platform builds on the success of the Starbucks Card, which has grown from a popular stored-value card to a significant method of payment in stores. Extending the program to a mobile platform was a natural opportunity to enhance the experience and allow customers to manage their Starbucks Card on the go.

eMarketer: Why did the company go with the Starbucks Card mobile app and how does it work?

Adam Brotman: Our customers told us they want a faster and easier way to pay, and Starbucks mobile payment apps are the fastest way to pay. Customers control the mobile payment transaction by holding their mobile device in front of a scanner on the countertop and scanning the barcode on the screen to make a purchase.

eMarketer: What kind of consumer response has the mobile payments program received?

“Within nine weeks of the national launch of mobile payment, customers in stores paid more than 3 million times using our mobile payment app, and this number continues to grow at a steady rate.”

Brotman: We’ve had a great customer response. Within nine weeks of the national launch of mobile payment, customers in stores paid more than 3 million times using our mobile payment app, and this number continues to grow at a steady rate. Additionally, My Starbucks Rewards members who sync their registered Starbucks Card accounts with the app and pay for purchases earn My Starbucks Rewards benefits. The My Starbucks Rewards program has more than 1 million gold-level members, and with the convenience of Starbucks Card mobile payment, it is a powerful catalyst for customer loyalty and retention.

eMarketer: What have been the major obstacles?

Brotman: In developing the app, it was important for us to ensure that there were no barriers for entry for customers. We deployed this program independent of carriers, handset manufacturers or payment companies so as many customers as possible can download and use the app. Additionally, we were unwilling to wait for the NFC landscape to mature. We use barcodes because it meets our needs, allowing all customers to use this technology to access the fastest way to pay at Starbucks.

eMarketer: Where are mobile payments heading?

Brotman: Based on enthusiastic customer feedback and positive early results, we believe that our customers are ready to embrace mobile payment. We are committed to innovating and offering new features that customers will find useful. In fact, on June 30, we introduced a new Starbucks for iPhone app that includes a new Starbucks Card egift feature that allows fast and easy virtual gifting. We will continue to watch trends in the mobile space and listen to customer feedback to provide new features as part of our evolving mobile platform.